FINANCIAL INFORMATION
PTC

Chairman's Speech at AGM of PFS

Ladies and Gentlemen Shareholders of the Company,

It gives me great pleasure to welcome you all to the 13th Annual General Meeting of your Company. With your support, we have come a long way in serving the infrastructure finance needs of the nation and contributing to the growth of renewable energy’s footprint across its diverse geography and community

To begin, let me thank you all for the confidence reposed and support extended to the Company. It is this confidence and support that enables us to grow every year despite challenges prevailing in the industry. The year 2018-19 saw a challenging business environment, including significant liquidity issues. Amidst all of this, your Company clocked positive business performance.

 


In its decade plus history, your Company has built a strong presence in financing generation, transmission & distribution projects across India, thus evolving into a proactive financial services institution in the country’s infrastructure landscape. The primary focus has been on financing renewable energy projects. I would also like to mention that during these years of service to the industry, your Company stayed on the path of responsible growth with calibrated business strategies across its product lines.

 

 


Your Company has completed 12 years of service to the Infrastructure industry in the financial year 2018-19. On reaching this milestone, your Company had an outstanding loan book of over Rs 13,300 Crore. Together with the non-fund based portfolio, the total asset portfolio is more than Rs 14,200 Crore. During the year completed, your Company was constantly working with new as well as existing project developers and was focused towards diversifying its portfolio in upcoming areas like E-mobility, Electrical Vehicle Charging infrastructure, sewage treatment annuity project under Namami Gange scheme.

 

 

Macro Overview

The global economy continues to grow, but the expansion was drastically impacted in the second half of financial year 2018-19 owing to escalation of US-China trade tensions, tighter credit policies in China, weakening financial market sentiment and trade policy uncertainty. The global Power sector scenario is also undergoing a significant change. Renewables are gaining share as the primary source of sustainable energy; substituting coal, nuclear and hydropower in a big way.

Power sector continues to be the lifeline of India’s economy and is a primary driver of economic growth & social development. Accordingly, the sector’s development is being given due importance in the national planning and resource allocation process.

Commitment to conserve our planet’s ecosystem has led India to formulate Intended Nationally Determined Contributions as per the Paris Accord on Climate Change. India has pledged that by 2030, 40% of installed power generation capacity would be based on clean sources. Accordingly, it was determined that 175 GW of renewable energy capacity will be installed by 2022. Therefore, Government of India’s thrust on Renewable Energy made this sector a fast emerging source of grid power in India.
Your Company focuses on attractive opportunities across the infrastructure sector especially the renewable energy projects, other areas such as power transmission, roads and highways, ports etc. are also witnessing action. Infrastructure sector is the key driver for the economy and possesses the potential for propelling overall development of the country. The sector continues to enjoy focus from Government both in terms of policy related initiatives and development of infrastructure in the country. New projects are being undertaken and government is poised to ensure all round development of the infrastructure sector of the country.

 

The total installed renewable energy capacity is 80.46 GW as on 30th June 2019. Ministry of New & Renewable Energy (MNRE) has set the target to double this to 160 GW i.e. wind power generation capacity to 60 GW and solar power capacity to 100 GW by 2022. Your Company focuses on attractive opportunities across the infrastructure sector especially the renewable energy projects. At the same time, other areas such as power transmission, roads and highways, ports etc. are also witnessing focused action. Infrastructure is the key driver for growth and possesses the potential for propelling broad-based and inclusive economic development of the country. The sector continues to enjoy focus from the Government in terms of policy initiatives, removal of bottlenecks and consequent shortening of implementation timelines. New projects are being undertaken and the Government is ensuring all types of enablers for them.

 

 

Infrastructure investment is a huge opportunity and your Company is focused on meeting the challenges and tapping the potential opportunities in the coming years. At the same time, your Company adopts a cautious approach, considering the stress evident in various project level entities. Therefore, your Company is also in the process of meaningfully addressing concerns in the stressed part of its portfolio of projects. We are mindful that each project may have a different set of challenges, and there may not be a `one size fits all’ approach to address them.

 

Business and Operational Highlights

During the year, PFS sanctioned new loans of Rs 5,124 Crore and made disbursements of Rs 4,085 Crore to various infrastructure projects. The sanctions included Rs 2,400 Crore to solar projects, Rs 450 Crore to wind projects, and Rs 2,274 Crore to other projects including road, transmission, distribution and also corporate loans. As at 31st March 2019, the renewable energy projects constitute the highest proportion in the outstanding loan book at around 59%, and thermal projects constitute about 14%. PFS will continue to focus on reduction of its exposure to thermal projects. In FY 2019-20, this exposure is expected to reduce to less than 10%. PFS also has a 2% exposure to hydropower project and 25% to other infrastructure projects as at 31st March, 2019. More diversification would be seen in upcoming sectors in the coming years.

The operational performance in FY 2018-19 has been improved significantly due to higher interest income and resolution of stressed / NPA loan accounts. In FY 2018-19 the total income has increased by 12.77 % from Rs 1,185 Crore in year 2017-18 to Rs 1,336 Crore. The profit before tax (PBT) for FY2018-19 stood at Rs 281 Crore compared to loss of Rs 150.42 Crore during FY2017-18. The profit after tax (PAT) for FY2018-19 stood at Rs 184.14 Crore against a loss of Rs 100.24 Crore. With focused efforts, Gross NPA has reduced from Rs 838.38 Crore to Rs 804.68 Crore and Net NPA from Rs 519.27 Crore to Rs 403.22 Crore. As on 31st March 2019, Gross NPA as % of gross advances is 6.04% and Net NPA as % of net advances is 3.12% as compared to 6.54% and 4.16% respectively for FY2017-18. PFS has resolved stress/ NPA loan accounts amounting to Rs 496 Crore.

During the year, PFS not only addressed the liquidity issues efficiently but also recorded a 4% growth in its fund-based portfolio. The gross portfolio stood at Rs. 14,237 Crore as at 31st March 2019 as compared to Rs 14,313 Crore as at the end of FY2017-18. The fund based portfolio stood at Rs 13,321 Crore as at 31st March 2019 as compared to Rs 12,816 Crore as at 31st March 2018. We look back with satisfaction at having achieved balanced business growth despite the turbulence in the entire NBFC sector. Even in a challenging business scenario, your Company became the first NBFC in India to obtain a Partial Credit Enhancement of Rs 400 Crore from State Bank of India, which will enable it to raise resources upto Rs 2000 Crore for long-term requirements.
The power sector is witnessing stress and several projects in the country (both operational and under construction) are facing challenges. As at 31st March 2018, PFS has non-performing loans aggregating to Rs 838 crore, projects having aggregate loan outstanding of Rs 854 crore are under corrective action plan (SDR/ OSDR) and standard restructured projects aggregating to Rs 207 crore. Further, only two wind projects aggregating to Rs 71.45 Crore are NPA which comes to 0.56% of outstanding loan and are in the advance stage of resolution.

The Board of Directors of the Company has recommended a dividend @8% i.e. Rs 0.80 per share for the financial year 2018-19.
The approach of PFS is to progressively reduce the NPA level by resolution of stressed assets through measures like sale to new investor or ARC/reference to NCLT/or through resolution plan under Samadhan/ Sashakt Scheme. Case by case approach towards resolution is being pursued by PFS. A special team has been set up to deal with and find resolution of stressed assets.

Credit Rating

The credit rating agencies have also maintained their outlook on your Company. This has been possible because of its robust business strategy, which led to a healthy earnings profile. CRISIL and ICRA have assigned their highest ratings “CRISIL A1+” and “ICRA A1+” respecitvely to the Commercial Paper Programme of PFS wherein ICRA has also assigned its highest rating “ICRA A1+” to the short term loans availed by the Company from banks. Long term instruments are rated “CRISIL A+/(Stable)” by CRISIL, “ICRA A+(Stable)” by ICRA, “CARE A+ (Stable)” by CARE and “BWR AA (Stable)” by Brickworks.

Corporate Social Responsibility

As a good corporate citizen, the Company is committed to ensuring its contribution to the welfare of the communities in the society where it operates. The Corporate Social Responsibility (“CSR”) initiatives of the Company are implemented either directly or through ‘PTC Foundation’ with a key focus on addressing community, societal and environmental concerns, while co-creating value with local institutions and people.

Corporate Governance

Your Company’s philosophy of Corporate Governance stems from its belief that the spirit of good governance lies in adherence to highest standards of transparency, accountability, ethical business practices, compliance of law in true letter and spirit, adequate disclosures, social responsiveness and commitment to the organization to meet stakeholder’s aspirations and societal expectations. Being an Infrastructure Finance Company, PFS regularly pursues businesses that maximize returns while effectively managing the inherent risks. Decision making and execution is driven by its governance structure, ethics and value systems. Your company ensures its employees to act ethically all the time. PFS’s philosophy of Corporate Governance embodies the dual goals of protecting the interests of all stakeholders while respecting the duty of the Board and Senior Management to oversee the affairs of the Company and promote long-term growth and profitability.


During the financial year 2018-19, your Company deployed Rs 9.16 Crore towards various CSR projects in the fields of healthcare, skill development and sanitation work.

Corporate Governance

Your Company’s philosophy of Corporate Governance stems from its belief that the spirit of good governance lies in adherence to the highest standards of transparency, accountability, ethical business practices, compliance of law in its letter and spirit. This is supported by adequate disclosures, social responsiveness and commitment of the organization to meet stakeholder and societal expectations.


PFS being in financing business regularly pursues businesses that maximize returns while effectively managing the inherent risks. Decision-making and execution is driven by its governance structure, ethics and value systems. Your company creates a work environment where all its employees act ethically, all the time.

Appreciation

I take this opportunity to thank all our esteemed shareholders and our promoter PTC India Limited, who have always extended their faith to us in our journey so far. My sincere thanks go out to the Ministry of Power and New & Renewable Energy, Ministry of Finance, Reserve Bank of India, Securities and Exchange Board of India, National Stock of India Ltd, BSE Ltd, Registrar, various commercial banks, Financial Institutions in India and abroad and the esteemed promoters of our assisted projects for their continued support and confidence. I am also grateful to my fellow members on the Board for their contribution towards steering the Company to a path of sustainable growth.

Last but not the least; I would also like to acknowledge the contribution of employees of PFS without whose continuous and untiring efforts none of this would have been possible. For all your efforts and aspirations for your Company, I would like to share some words of Colin Powell:

“There are no secrets to success. It is the result of preparation, hard work and learning from past;.

With warm wishes.

Deepak Amitabh
Chairman

 

PTCPTC

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